North Carolina

How is captive insurance benefiting the State of North Carolina?

Last year, the North Carolina captive insurance industry experienced rapid growth, with the captive industry making a $23 million economic impact on the state.

Since the launch of the state’s captive insurance programme more than three years ago, the industry has seen significant growth each year. In 2015, the economic impact of captives was $15.3 million, while the impact in 2014 was $2.5 million.

Last year, the number of captive insurers in North Carolina more than doubled, and the number of cells and series approved increased by more than 50 percent.

The state now has more than 550 risk-bearing captive insurance entities under the regulation of the North Carolina Department of Insurance. At the insurance department, we estimate that the state’s favourable business environment for captive insurers has brought 60 new jobs to the state.

Businesses are also finding the state’s regulation a plus when selecting a jurisdiction in which to domicile a captive insurance company. Our captive law provides for low formation and operations costs, and our customer service is second to none.

What else makes North Carolina stand out from others in the US?

While providing for prudent yet reasonable oversight, North Carolina’s captive insurance law offers flexibility for a captive insurer domiciled in the state.

North Carolina’s law provides the commissioner with discretion to regulate each captive insurer based on its risk profile while also eliminating duplication. For instance, one way in which duplication is eliminated is the captive insurer may obtain a waiver, on a case by case basis, from the annual report filing requirement if the insurer complies with the independent certified public accountant audit requirements.

The law provides for a low regulatory cost for the formation and operation of North Carolina captive insurers. The insurance department doesn’t charge any fees to captive insurers—there is no application fee, business plan change fee, or annual fee—providing another incentive for insurers to domicile in North Carolina, although it’s worth noting there is an application fee for a special purpose financial captive insurer. Our premium tax rates are competitive with other jurisdictions.

The insurance department uses its in-house analysts, examiners, and actuaries in the review of applications, business plans, and other insurer filings submitted for approval. In-house resources are also used to conduct examinations. Because these functions are not outsourced, this is a cost savings for captive insurers.

One of the primary ways in which North Carolina is distinguishing itself is through its customer service to the captive insurance industry. Applications and other filings submitted to the department for approval are timely reviewed and staff members are responsive, available and accessible to the industry.

What was the outcome of the 2017 legislation session and how will these updates help develop the state’s captive insurance industry?

During the 2017 legislative session, the North Carolina General Assembly approved funding for three additional positions to help the insurance department with its oversight and development of the captive insurance market. The addition of those positions will assist the department in continuing to provide proper regulation of and outstanding customer service to the captive industry.

What sessions are you most looking forward to at the North Carolina Captive Insurance Association Annual Conference?

Mike Causey, the state’s commissioner of insurance, and our captive insurance regulatory team will be very involved in this year’s North Carolina Captive Insurance Association Annual Conference taking place between 21 and 23 August in Charlotte.

We are looking forward to presenting and participating in a number of sessions. The first will take place on 21 August in the 101 Fundamental Seminar in which I will be speaking along with representatives of River Oak Risk and Culp, Elliott & Carpenter.

Next, our team will present during the opening general session and we will share information about 2017 changes that have taken place at the insurance department, our captive insurance regulatory process and approach, and the status of our programme and how it has developed since its inception in 2013. Then, our captive team will have a special presentation that we hope will be entertaining yet informative.

Commissioner Causey will provide the luncheon speech on 22 August, and several members of our team, including Michael Arcangel, Rick Kohan, Matt Mascia and Leane Rafalko, will be participating in other sessions throughout the conference.

Our team will be exhibiting at the insurance department’s booth throughout the conference and we look forward to seeing and speaking with all of the conference attendees.
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